Trendline
Also known as: trend line
A trendline is a straight line drawn across a series of price highs or lows on a chart, used to visualize the direction and pace of a 's prevailing trend. It is one of the most basic tools in , and much of chart-based trading, from to triangle and , is built on the same underlying skill of drawing accurate trendlines.
An line is drawn beneath a series of rising lows, connecting points where the has repeatedly found support on its way up, and it typically slopes upward from left to right. A line is drawn above a series of falling highs, connecting points where the has repeatedly met resistance on its way down, and it typically slopes downward. The more times a 's price touches a trendline and reverses off it without breaking through, the more significant that trendline is generally considered to be, since it shows the level has repeatedly attracted buyers or sellers.
A break through a well-established trendline is often treated as an early warning that the existing trend may be weakening or reversing, particularly when the break is decisive and accompanied by an increase in volume. Because trendlines are drawn manually based on judgment about which highs and lows to connect, they carry an element of subjectivity, different traders looking at the same chart may draw slightly different lines, which is why trendline analysis is generally treated as one input alongside other tools rather than a precise, mechanical signal.